I think everyone's overcomplicating this. The purpose of tracking non-deductible expenses is pretty straightforward - it's to properly track each partner's tax basis. The IRS wants to make sure partners don't claim more losses than they have basis for. The mortgage principal thing makes sense when you think about it: principal payments aren't expenses at all. They're converting one asset (cash) to reduce a liability (loan balance). That's why they don't flow through to capital accounts the same way as true expenses. The 50% non-deductible meals absolutely should be included though. Those are true expenses that just happen to be limited for tax purposes.

I've been dealing with similar issues in my partnership and wanted to share what I learned from our CPA. The key insight that helped me was understanding that non-deductible expenses serve two purposes: they reduce each partner's outside basis AND they reduce their capital accounts for book purposes. This is why mortgage principal payments don't belong in this category - they don't reduce anyone's economic investment in the partnership since the partnership is getting value (reducing debt) in exchange for the cash payment. One thing I haven't seen mentioned is that you also need to be careful about timing. Non-deductible expenses should be allocated in the same tax year they're incurred, even if the partnership is on a different accounting method for other purposes. Also, make sure your operating agreement is clear about how these allocations work. We had to amend ours because it wasn't specific enough about whether non-deductible expenses follow the same allocation as regular expenses or if they have their own rules.

Thanks for the update Omar! That clears up the W-4/1099 confusion. Since the insurance company has confirmed you're classified as an independent contractor, you're definitely on the right track with Schedule C filing. One thing I'd suggest is requesting a corrected 1099-MISC if there were any periods where you should have been treated as an employee vs. contractor, especially if the classification change happened mid-year. This could affect your tax liability since employee wages have different withholding requirements. Also, make sure to set aside money for quarterly estimated taxes going forward if you continue this work - as a contractor, you're responsible for paying taxes throughout the year rather than having them withheld. The IRS expects quarterly payments if you'll owe more than $1,000 in taxes. Good luck with your filing!

Omar, just wanted to add one more consideration that hasn't been mentioned yet - since you're providing care services through Wisconsin's no-fault insurance system, you might want to check if there are any state-specific tax implications. Some states have different rules for how insurance-paid caregiving income is treated. Also, when you file Schedule C, make sure to use an appropriate business code. For home healthcare services, you'd likely use NAICS code 621610 (Home Health Care Services) or 624120 (Services for the Elderly and Persons with Disabilities). This helps the IRS properly categorize your business type and can be important for any future correspondence. Since this arrangement came about due to specific circumstances (your friend's accident and subsequent care needs), you might also want to document the nature of this work relationship in case the IRS ever questions whether this truly constitutes a business. Keep records showing the formal insurance arrangement, your care responsibilities, and the professional nature of the services provided.

Wait I'm confused about something... if you're getting paid through CashApp, shouldn't CashApp be sending you a 1099-K if you received over the threshold amount? I thought payment apps were required to report to the IRS now?

Hey Olivia! I totally understand your frustration - I had a similar situation last year where my employer kept giving me the runaround about tax forms. Here's what I learned from going through this: First, definitely report that $14,625 as self-employment income on Schedule C, even without the 1099. The IRS cares way more about you reporting all your income honestly than whether you have the official paperwork. Download your complete CashApp transaction history for 2024 - that's your proof of income. Your employer is technically wrong about not being "legally required" to provide 1099s. They should issue a 1099-NEC since you earned over $600, but their failure to do so doesn't stop you from filing correctly. Since you're filing as self-employed, don't forget about the self-employment tax (15.3% on top of regular income tax) - it can be a shock if you're not expecting it! Also look into business deductions like mileage to work, any supplies you bought, etc. Keep records of all your attempts to get the 1099 from them. Send one more email asking for a written statement of how much they paid you in 2024 - even an informal email works as documentation. If they still won't cooperate, you're covered as long as you report the income accurately. You've got this! The most important thing is being honest about your income, which you're clearly trying to do.

whatever you do dont use those sketchy third party websites that charge you $30 to check. stick to the official nc government site

Also worth noting that NC typically processes e-filed returns much faster than paper ones. If you e-filed and it's been more than 3 weeks, that's when I'd start following up. The "Where's My Refund" tool on ncdor.gov usually updates once a week, so don't panic if it doesn't change daily.

Quick tip: If you're sending a payment by mail instead of electronically, you DO need to include the payment voucher from the 1040-ES form. Tear off the appropriate voucher for the quarter you're paying, fill it out, and send it with your check. But for electronic payments, just keep your confirmation number and you're good! No paperwork needed.

Don't forget to make sure your bank payment memo includes your SSN and "1040-ES" plus the tax year and quarter number (like "2024-Q1"). I made the mistake of just putting "Estimated Tax" and the IRS couldn't figure out whose account to apply it to!